What is a QCD?
A QCD is a distribution that goes directly from an IRA to a qualified charity which provides potential tax advantages because QCDs can satisfy Required Minimum Distributions (RMDs) and are excluded from taxable income.
QCDs are allowed after you turn 70.5, and allow you to transfer up to $108,000 per individual per year from your IRA to a qualified charity in 2025.
This is especially advantageous when you are subject to RMDs because, if you make a QCD before or as part of your RMD
QCD amount counts toward satisfying your RMD for the year
QCDs are excluded from your AGI
So, if your RMDs are taking you above your preferred tax bracket or IRMAA tier and you are charitably inclined, you may want to consider QCDs.
Example: If your RMD for the year is $10,000 and you make a $5,000 QCD, only $5,000 of the remaining RMD must be withdrawn as taxable income.
Note: Timing matters
A QCD must be processed before any taxable RMD withdrawals to be excluded from taxable income.
If you withdraw your RMD first and then make a QCD, the withdrawal will be fully taxable, and the QCD won’t reduce your taxable income for the RMD.
Can I model a QCD in Boldin?
You may model a QCD using the Disbursement feature, and selecting "deductible." Navigate to My Plan > Expenses and Healthcare > Disbursements.
Unfortunately, at this time, the calculation will not reduce the RMD but this feature enhancement is on our Roadmap.
Alternatively, you could, as a workaround, break apart a portion of an IRA which will be used for QCDs and enter it as a Roth.